IDFC Bank surges up by 7 per cent post Reserve Bank of India nod for merger

IDFC Bank was buzzing on Wednesday after the bank announced that it is in receipt of No Objection letter from the Reserve Bank of India with regards to its proposed merger with Capital First.

At 12:42 hours, the stock of IDFC Bank was trading at Rs. 41.35 per share, up by 8.10 per cent, and its parent IDFC Limited was at Rs. 48.50, up by 4.41 per cent on Wednesday. While Capital First was quoting Rs. 563.00 per share, up by 5.63 per cent.

In January 2018, the universal bank IDFC Bank and the non-banking financial institution (NBFC) Capital First agreed to merge in a swap deal. The swap ratio was decided at 139 equity shares of IDFC Bank for 10 shares of Capital First. Pursuant to this regulatory approval from the RBI, entities Capital First Limited, Capital First Home Finance Limited and Capital First Securities Limited will amalgamate with IDFC Bank Limited. The merger process is expected to be completed in the next four to five months.

According to RBI guidelines, IDFC Limited, the promoter entity of IDFC Bank, will have to maintain 40 per cent stake for in the new bank for five years. Post the merger V Vaidyanathan, CMD and founder of Capital First will lead the merged entity as the CEO. While Rajiv Lall, Founder MD and CEO of IDFC Bank will step aside to Non-Executive Chairman role.